Ukraine: Council endorses agreement on a further €1bn in loans

A further €1 billion in loans will cover Ukraine’s financing needs over a period of two and a half years. The loans will support economic stabilisation and a programme of structural reforms, supplementing resources provided by the IMF and other donors.

The IMF has identified a $4.5 billion financing gap for 2018 and 2019, going over and above funding committed so far by the international community.

Macro-financial assistance is an exceptional form of financial aid that the EU extends to partner countries with balance-of-payments difficulties. This is the third operation for Ukraine since 2014. The EU additionally provides assistance under its neighbourhood policy.

The EU pledged €1.6 billion of macro-financial assistance in 2014 and €1.8 billion in 2015, of which Ukraine received €2.81 billion. A €600 million instalment was cancelled in January 2018 due to incomplete compliance with the conditions set.

Ukraine is part of the EU’s Eastern Partnership. An EU-Ukraine association agreement, which includes free trade provisions, entered into force on 1 September 2017.

The further disbursements will be conditional on Ukraine respecting democratic mechanisms and the rule of law, and guaranteeing respect for human rights. They will be subject to economic policy and financial conditions, focusing on structural reforms and sound public finances and including a timeframe for their fulfilment. The conditions will be laid down in a memorandum of understanding between Ukraine and the Commission.

The Commission will be responsible for disbursing the macro-economic assistance. The Commission and the European External Action Service will monitor the fulfilment of the conditions.